Work Super 101 – Part 1
If you have a full time job or part time job, then you will have superannuation.
Regardless of your views on super, it is compulsory for employers to pay a certain level of super for their employees. It is currently 9.5% of your ordinary time earnings. Generally speaking, it is paid on the amount you earn for your ordinary hours of work.
As an employee starting a new job, your employer will provide you with a number of forms to complete. Amongst them will be:
- a TFN Declaration form to help the employer calculate how much income tax to deduct from your gross pay and remit to the ATO on your behalf (you have to fill in Part A); and
- a Super Choice Form which is your instruction to your employer as to which superannuation fund you would like your super to be paid into
Because of the excitement of the new job, filling in forms becomes a bit of a chore. For most people, nothing is more boring than superannuation (apart from watching paint dry) so when it comes to choosing a super fund, the easiest choice is to tick whatever default option the employer offers. Super is super right? Who cares?
You should care! If you choose the default super option offered by your employer, your money will generally go to a default option or a MySuper option in one of the following types of super fund:
- Industry fund
- Government fund
- Corporate fund
- Employer-sponsored fund
I am not saying that these funds are poor choices. What I am saying is that your apathy in not making a more informed decision is the poor choice. It’s leaving your retirement savings in someone else’s hands and hoping for the best that is the poor choice. By doing so, you are giving up the opportunity to have active control over your money. I’m sure you wouldn’t do that with any other money you have.
Also, the rod you are making for your own back is, by repeatedly selecting the default employer option every time you change jobs, you end up with a trail of superannuation accounts behind you.
While many employees in private enterprise can choose where their super goes, there are some employee groups who can’t. It would come as no surprise that the most notable exceptions to the freedom of superannuation choice are the employees of union driven workplaces and the employees of the government itself.
If you work in any level of government in Australia, you will only be allowed to contribute to the relevant government super fund. Similarly, if you work is a unionised workplace, you are likely to find there is an award or workplace agreement which forces your employer to direct all or part of your super to a relevant industry fund. Industry funds are those funds which are run for the benefit of their members and of course, their associated unions.